Mike Purdy's Public Contracting Blog: May 2013

Thursday, May 30, 2013

Training in Spokane, WA: Developing and Managing RFPs and RFQs

Developing and Managing RFPs and RFQs

When: June 18, 2013 (8:30 a.m. to 4:30 p.m.)
Where: Spokane, Washington (Enduris Professional Center, 1610 S. Technology Blvd)

Cost: Free for WCIA members; $115 for non-WCIA members

Instructor: Mike Purdy

Class Outline:

When to Use and RFP vs. RFQ
Solicitation Methods
Developing Evaluation Criteria
Writing Scopes of Work
Managing the Solicitation Process
Conflicts of Interest
Cost and Price Analysis
Advertising Issues
Pre-Submission Meeting
Receiving and Opening Proposals
Evaluation Committee and Evaluating Proposals
Managing Interviews
Recommending Award
Contract Negotiations

Registration: Click here.

Questions? Please contact me if you have any questions about the class.

Wednesday, May 29, 2013

Choosing the Right Construction Project Delivery Method

Traditionally, public agencies have awarded public works construction projects using what is often referred to as "Design-Bid-Build," in which the award is based on the low responsive bid submitted by a responsible bidder.

Alternative Project Delivery Methods: Increasingly, alternative project delivery methods that have been used in the private sector are being used in the public sector. Most prominent among the alternative methods are Design-Build and Construction Manager at Risk (also known as GC/CM, CM/GC, CMAR, etc.). Regulations differ from state to state on how these methods work or if they are even authorized. In Washington State, Design Build and GC/CM (General Contractor/Construction Manager) are authorized and their permitted use described in Chapter 39.10 RCW.

Analysis of 4 Project Delivery Methods: I recently ran across an excellent ten-page, easy-to-read article from the Fall 2004 issue of Popular Government, based in North Carolina, entitled "Public Construction Contracting: Choosing the Right Project-Delivery Method" by Valerie Rose Riecke. The article analyzes the following four project delivery methods:

Design-Bid-Build using separate (or multiple) prime bidding
Design-Bid-Build using a single prime bidding
Construction Manager at Risk
Design-Build

Construction industry goals: The article presents the findings of a questionnaire distributed to construction industry experts addressing the advantages and disadvantages of each of these four project delivery methods based on the following four construction contracting industry goals:

Controlling project costs
Meeting or accelerating the schedule
Ensuring a quality product
Decreasing the administrative burden.

Comment: The article, while dated, does a good job of explaining the perceived advantages and disadvantages of each of the four project delivery methods. Of the four methods identified, the Design-Bid-Build using separate (or multiple) prime bidding is not used frequently, and rated much lower in most of the questionnaire results. There are only a handful of states that even permit the use of this method.

Previous Blog Post: On April 25, 2012, I published a blog post summarizing a variety of project delivery methods and the advantages and disadvantages of each. Click here to read the posting.

Tuesday, May 28, 2013

When is the Last Day an Addendum Can Be Issued?

During the bidding process, public agencies frequently issue addenda to modify the bid documents.

Evaluating the last day for an addendum: The following are some of the factors that should be considered in determining the last day an addendum can be issued.

Laws and policies: If there are any state laws or agency policies regarding the last day to issue an addendum, these should be followed. In Washington state, there are no state laws governing this issue.

Bid documents: Sometimes bid documents will establish a deadline for issuance of addenda. There are risks in having such a deadline, especially if last minute issues arise that require an addendum to postpone the bid submission deadline. It can be problematic to have language in the bid documents (or laws and policies) that restrict the last day for issuing an addendum.

Adequate time: From my perspective, what should control the last day to issue an addendum for a project is whether there is sufficient time for bidders to review the modifications and make appropriate changes to their bid price. For example, if an addendum is issued with significant changes two days before the bid submission deadline, it may be a good idea to also delay the bid submission deadline in order to provide bidders with sufficient time to understand the nature of the changes. On the other hand, an addendum issued two days before the bid submission deadline that has only minor changes to the bid documents may not require an extension of the bidding period.

Distribution of addenda: Another factor to consider in making the decision on what is the last day to issue an addendum is whether the public agency has a comprehensive process to ensure that all bidders receive any addenda issued in a timely manner. Electronic distribution of addenda helps ensure timely receipt versus sending a hard copy to all bidders on the plan holder's list. Some agencies post all addenda to a website and place the responsibility on bidders to check the website prior to submission of a bid. But for last minute addenda that are issued, it is a good idea for public agencies to reach out to bidders (perhaps by telephone) to make sure they are aware of the addenda. This will help ensure that bidders are submitting a bid based on what the agency has specified, and can help avoid a non-responsive bid if a bidder fails to acknowledge receipt of a last minute addendum.

Monday, May 27, 2013

3 Job Openings

Washington State Administrative Office of the Courts

Position: Contracts Specialist

Location: Olympia, Washington

Closing Date: Monday, June 10, 2013

Salary: $51,864 to $68,016 per year

Job Summary: Drafts and administers procurement documents, contracts, and other agreements for goods and services requested by the Administrative Office of the Courts and other departments and independent entities of the judicial branch according to the appropriate policies and procedures of the branch.

For More Information and to Apply: Click here.

Washington State Office of Financial Management

Position: Capital Budget Assistant to the Governor

Location: Olympia, Washington

Closing Date: Open until filled

Salary: $6,068 to $7,129 monthly

Job Summary: The Capital Budget Assistant to the Governor will develop capital budget recommendations, ensuring that capital funds are balanced, assist in the development of long-term funding strategies, approve agency spending plans, and monitor project implementation and delivery. Agency assignments are expected to include the departments of enterprise services, corrections, and most natural resource departments.

For More Information and to Apply: Click here.

KCDA Purchasing Cooperative

Position: Executive Director

Location: Kent, Washington

Closing Date: Friday, June 28, 2013

Salary: DOE

Job Summary: The Executive Director serves as chief executive officer, in a public purchasing cooperative and distribution center, owned by 294 school districts in the State of Washington. Other co-op members consist of nearly 1,100 public agencies and school districts in Washington and surrounding states. Responsible for strategic planning and directing all operations, including procurement and contracting, customer service, warehousing, finance, human resources and information technology. Develops relations and effectively communicates with a wide variety of constituents including board members, co-op members, employees, suppliers, attorneys, government officials and labor representatives. The Executive Director assures that members save time and money on their procurements. This position reports to the board of directors.

For More Information and to Apply: Click here.

Thursday, May 23, 2013

Job Opening: Senior Contracts Specialist

Sound Transit

Position: Senior Contracts Specialist

Location: Seattle, Washington

Closing Date: Wednesday, June 5, 2013 at 5:00 p.m., Pacific Time

Salary: $59,419 to $74,273 annually

Job Summary: Under general direction, performs the full range of senior professional and technical duties involved in the preparation, finalization, analysis, and administration of technology, systems, materials, services, small construction, and other agreements and contracts in area of assignment for Sound Transit. Leads or assists Sound Transit departments and project managers in selection of procurement methods and strategies. Prepares, issues, and awards contracts for Sound Transit in accordance with policies, procedures and in compliance with all state, federal and local regulations and laws. Leads or assists departments and project managers in the preparation and administration of solicitations of a complex nature and associated contracts. Performs specification reviews. Responds to questions and issues and provides technical expertise and assistance related to associated agreements and contracts. Performs contract administration and close-out. Serves as subject matter expert for assigned programs which may be complex and controversial. The position is responsible for cradle-to-grave procurement and contract work.

For More Information and to Apply: Click here.

Wednesday, May 22, 2013

Avoiding Audit Findings

Public agencies are regularly subject to the scrutiny of federal, state, and local auditors, whose role is to report on whether the agency has complied with laws, regulations, policies, and grant provisions.

What do auditors review? Most auditors do not audit all procurement and contracting actions for compliance with all requirements. Instead, auditors typically have a checklist of key items they review on selected contracts.

Federal requirements: Auditors regularly review to ensure that state and local agencies are in compliance with the provisions of federal grants. While receiving federal funds enables an agency to accomplish work it might not otherwise be able to do, federal grants do come with many and often complex requirements. It is important that each agency receiving federal funds carefully review the grant requirements and comply with them. Who is responsible in your agency for reviewing and complying with federal grant provisions?

Common audit finding: One of the most common audit findings on federally funded projects relates to agencies that fail to verify that all vendors, contractors, and consultants who receive $25,000 or more have not been suspended or debarred from doing business on federally funded projects. Educational Service District No. 112 (a public agency supporting school districts in southwest Washington state) recently received an audit finding from the State Auditor's Office for failure to produce documentation that they had verified that two vendors were not on the federal suspension or debarment list.

How to check for federal debarment: It's easy to check for whether a business your agency is contracting with has been suspended or debarred from doing business with the federal government. Go to www.sam.gov, and enter the name of the business. If the search does not reveal a record, click on the "save PDF" link that will include the name you searched for as well as a note indicating there were no search results. Print this PDF and maintain it in your contract/project file for when you are audited.

Documentation matters: Auditors are not mind readers. You may have made appropriate decisions about a procurement or contract, but if your files do not include documentation demonstrating that you complied with the law and your policies, you may receive an audit finding. Remember to maintain documentation in your files about your actions.

Tuesday, May 21, 2013

When is a Low Bid Not in the Public's Best Interests?

Most public agencies have competitive bid laws that basically require the agency to award a public works project to the bidder with the lowest responsive bid who is also a responsible bidder.

Low bids save money, right? But what happens if the low bid is too low? It's so much lower than any of the other bidders, and significantly lower than the agency's estimate. On the one hand, the agency is delighted to have the opportunity to save a significant amount of money. On the other hand, a bid that is too low may be deceptive, and may end up costing the public agency more in the long run with change orders and lower quality work.

Is there a mistake? The bidder with a bid that is unreasonably low may, after bid opening, discover an error in its bid, and request the agency to relieve them of the obligation for the bid. Sometimes, however, a bidder may insist they can perform the project for the amount bid, despite the bid price being so much lower than expected.

Meet with the bidder: If a bidder does not claim an error and request to be let off the hook, but the public agency is still concerned with how low the bid is, the agency should meet with the bidder to discuss the following:

Understanding the project: Does the bidder understand the scope of work, schedule, and constraints of the project? Explain the project scope to the bidder and ask questions about whether they understand specific elements of the project.

Review bid preparation documents: Review with the bidder at the meeting the bidder's original bid preparation documents. Ask questions about where certain costs have been included in the bid amount.

Public works requirements: Is the bidder aware of what is required for performing a public works project with all of its requirements, including but not limited to payment of prevailing wages to workers? Explain the various reporting requirements and administrative expectations that are described in the bid documents.

Bid guaranty: Is the bidder aware that requesting to withdraw their bid will not result in their bid guaranty being forfeited? The only situation in which a public agency may tap into the bid guaranty is if the agency awards the project to a contractor who then refuses to execute the contract.

Dealing with a non-cooperative bidder: What should a public agency do if a bidder refuses to meet with them to discuss their bid, or refuses to provide their original bid preparation documents for review by the public agency? Unreasonably low bids are submitted by bidders, so it's a good idea to anticipate how to handle them when they occur. One way to address this situation is to include language in the Instructions to Bidders that gives the public agency the right to require the bidder to attend a pre-award evaluation meeting and to provide their original bid preparation documents to the agency for review. The language could specify that failure to do so would result in the bid being declared non-responsive. Here's some potential language that could be included in the Instructions to Bidders:

Ask your attorney: Be sure to involve your agency's attorney in approving language for bid documents, and to assist in evaluating a bid that is too low.

Monday, May 20, 2013

The Envelope Please: Opening the Right Bid

All bids have been received. The clock shows that it is past the bid submission deadline. You gather up the bids and take them to the room where you will open them. One by one, you open the envelopes, pull out the bids, and read them.

The wrong envelope: But suddenly you realize that the bid you have just pulled out of an envelope isn't for the project you're opening bids for. In fact, it isn't even for any of the projects you're opening bids for now, but for a project with a bid submission deadline next week.

Assumptions: Let's assume the follow circumstances:

You stop short of reading the wrong bid
You don't notice or look at the bid price
You don't reveal the name of the bidder
The room is full of contractors and agency employees

What should you do? Under the circumstances, it is best to be as honest and transparent as possible.

Tell the story: Describe factually to the assembled audience what has just occurred, including the fact that you did not see the bid price.

State your intent: Tell the audience that the bid will be opened and read after the actual bid submission deadline.

Re-seal envelope: With the audience as witnesses, put the bid back into the envelope and re-seal it immediately with tape.

Write it down: Document in writing what has just occurred, with the document signed by at least agency employees who were present. If you're able to get one or two contractors to sign it as well, that would be helpful. In the event of a challenge or protest, this documentation will be helpful in defending your agency's action to consider the bid that was opened early.

Lessons learned: Here are a couple of lessons learned from this scenario:

Require project name on bid envelope: Have language in your Instructions to Bidders requiring that the bidder write the project and bidder name on the bid envelope.

Check that project name is on bid envelope: Staff receiving the bids should ensure the project and bidder name are on each envelope as they are submitted.

Separate bids received by project: Train staff who receive bids to keep the bids separate by project.

Check that bids are for the correct project: Before bids are released to be read, the person who received them should go through the envelopes one by one to make sure they are for the correct project.

Double-check bid envelopes before reading: Before beginning to open bids, the bid reader should double check the bid envelopes to ensure they are for the correct project.

Truth is stranger than fiction: These type of situations actually occur, and point out the importance of carefully managing the bid receipt and opening process. Obviously, the facts of your situation may be different and may call for you to change how you respond.

Thursday, May 16, 2013

Job Opening: Procurement and Supply Specialist 4

South Puget Sound Community College

Position: Procurement and Supply Specialist 4

Location: Olympia, Washington

Closing Date: Wednesday, May 22, 2013

Salary: $3,819 to $5,010 per month

Job Summary: This position is responsible for performing and supervising the College procurement process. This includes delivery of goods and services,equipment, materials, contracts, bids, and purchase card management to ensure staff and faculty have quality products at the best price and in a timely manner to facilitate and enhance student learning. The position supervises college purchasing and the Central Services department to ensure staff and faculty receive mail and copy jobs in a timely manner to facilitate and enhance student learning.

For More Information and to Apply: Click here.

Wednesday, May 15, 2013

4 Contracting Controversies from Around the Country

Illinois Opposition to Apprenticeship Legislation: The Kendall County Board in Illinois voted to oppose a proposed bill in the legislature that would amend the state's prevailing wage laws to require public works contractors to participate in apprenticeship programs for their workers. House Bill 924 would require the use of apprentices on public work projects, even those funded only with local money. The Board's letter of opposition states in part that

Click here to read a news article about the County's opposition to the legislation.

New Jersey Specifications Challenged as Too Specific: A New Jersey truck dealer is challenging the detailed specifications put out to bid by Monmouth County, alleging that the specifications limit the bidding pool. "They try to write a specification so they get the product they want, not necessarily always the best product," said John Schwartz. The County has responded by noting that they specify "equipment based on its particular needs." The dispute raises an important tension between specifications that meets a public agency's operational needs and specifications that limit competition and direct work to one or two businesses. Click here to read a news article about the controversy.

California Wrestles with a Bid That is Too Low: The City Council for the City of Coronado, California recently awarded the Glorietta Bay Pump Station project to the low bidder, despite concerns raised by a council member that the bid was too low and would result in change orders. Council member Barbara Denny noted that the low bid of $49,100 was almost $100,000 lower than the second lowest bid of $145,398. Seven bidders bid the project. The Council discussion centered around what the "lowest responsible bidder" means and the authority of the city to issue change orders. Click here to read the Council minutes from April 2, 2013. If a low bidder with an unreasonably low bid insists they can perform the project for the bid price, must a public agency award the bid to them? It's a good question, and one I'll address in a future blog posting.

Kentucky Violates Competitive Bidding Requirements: The board for the Madisonville Public Library in Hopkins County, Kentucky awarded contracts for library renovations over their bid limit of $20,000 without publicly soliciting competitive bids as required. The original project cost was apparently under the threshold, and when the estimated cost increased, the board didn't consider competitive bidding. Click here for a news article about the situation.

Tuesday, May 14, 2013

Job Opening: Contracts Specialist 2

Western Washington University

Position: Contracts Specialist 2

Location: Bellingham, Washington

Closing Date: Thursday, May 23, 2013

Salary: $3,549 per month

Job Summary: The principal purpose of the Contracts Specialist 2 position is to play a key role in the University’s contracting processes by ensuring University contracts are prepared and processed in accordance with University policies and state laws and regulations. This position prepares contracts, interagency agreements, leases, and letters of understanding to provide or obtain services or goods for the University. It provides technical contract support activities such as contract cost/price analysis, contract compliance administration or contract property administration. The position provides guidance to campus clients on appropriate course of action for procurement/contracting methodology for goods and services. This position works under general supervision of the Director of Business Services.

For More Information and to Apply: Click here.

Training: Construction Project Scheduling & Delay Claims

Construction Project Scheduling & Delay Claims

When: June 14, 2013 (9:00 a.m. to 4:45 p.m.)

Where: Seattle, Washington (City University, 521 Wall Street)

Instructors:

W. Gregory Guedel, Foster Pepper PLLC
Daniel G. Quackenbush, Quackenbush & Associates
Paul M. Bintinger, Port of Seattle
Gregory A.V. Clark, Foster Pepper PLLC
Megan S. Wells, Navigant Consulting, Inc.

Agenda:

30 Minutes to CPM Proficiency
Basic Scheduling Concepts for Delay, Acceleration and Mitigation
Primary Legal Concepts for Delay Claims
Cost Analysis for Schedule and Delay Claims
The Evolving Claims Landscape for Projects in Washington & Oregon
Contracting Strategies for Schedule Issues
Managing Schedule Delays and Claims on Complex Construction Projects

Cost:

$425 - government employees
$525 - single registration
$500 - two or more registrations
See website for other prices

Information and registration: Click here.

Portland class: Similar class offered on June 12, 2013 in Portland, Oregon. Click here for details.

Monday, May 13, 2013

Two Training Classes in June: 1) Public Works Bidding and Contracting 2) Developing and Managing RFPs and RFQs

I will be teaching the following two training classes in June at the locations indicated below, sponsored by WCIA (Washington Cities Insurance Authority):

Public Works Bidding and Contracting

When: June 3-4, 2013 (9:00 a.m. to 4:00 p.m.)

Where: Mukilteo, Washington (Mukilteo Water & Wastewater District, 7824 Mukilteo Speedway)

Cost: Free for WCIA members; $175 for non-WCIA members

Instructor: Mike Purdy

Class Outline:

Types of Public Contracts
What is a Public Work?
Small Works Rosters
Developing Bid Documents
Bid Receipt and Opening
Bonds and Insurance
Bid Responsiveness
Bidder Responsibility
Bidding and Award
Prevailing Wages
Change Orders
Retainage and Contract Close-out
Relevant Laws

Registration: Click here.

Developing and Managing RFPs and RFQs (in 2 locations)

When: June 12, 2013 (8:30 a.m. to 4:30 p.m.)
Where: Mukilteo, Washington (Mukilteo Water & Wastewater District, 7824 Mukilteo Speedway)

When: June 18, 2013 (8:30 a.m. to 4:30 p.m.)
Where: Spokane, Washington (Enduris Professional Center, 1610 S. Technology Blvd)

Cost: Free for WCIA members; $115 for non-WCIA members

Instructor: Mike Purdy

Class Outline:

When to Use and RFP vs. RFQ
Solicitation Methods
Developing Evaluation Criteria
Writing Scopes of Work
Managing the Solicitation Process
Conflicts of Interest
Cost and Price Analysis
Advertising Issues
Pre-Submission Meeting
Receiving and Opening Proposals
Evaluation Committee and Evaluating Proposals
Managing Interviews
Recommending Award
Contract Negotiations

Registration: Click here.

Questions? Please contact me if you have any questions about the classes.

Sunday, May 12, 2013

Are You Releasing Payment and Performance Bonds Too Early?

Bonding companies regularly send "status inquiry" forms to public agencies about the status of public works construction projects for which they have issued payment and performance bonds. Sureties are trying to monitor and keep track of their potential liabilities.

Uncompleted projects: Status inquiry forms typically ask questions such as the following for projects that have not yet been completed:

Approximate percentage of the project that has been completed
Approximate dollar amount of the contract that has been paid
Anticipated completion date
Listing of any unpaid labor or material bills the public agency knows about
Whether the agency is satisfied with the work performed to date

Completed projects: If the project has been completed, the status inquiry form will typically ask for the completion date and the final contract amount paid to the contractor.

Read the fine print: For a project that has been completed, some status inquiry forms will also have a statement (that goes along with the public agency's signature on the form) that may read something like the following:

Problems with the fine print: There are two problems with the fine print language noted above:

Warranty work: Even though the work on the project may be complete, most public works construction contracts include language in which the contractor warrants or guaranties for the work for a year after completion. If a public agency signs the status inquiry form releasing the payment and performance bond before the warranty period is over, and if the contractor fails to return to correct work during the warranty period, the public agency will not have any protection that would otherwise be afforded by the bond to ensure that the warranty work is completed. When a surety issues a bond, they agree to all of the provisions of the contract, which includes the warranty period, so public agencies should not sign an inquiry status form releasing the bond before the end of the warranty period.

Keep the original bond: The original payment and performance bond is a matter of public record and should be retained by the public agency, even after the work has been completed and the warranty period has expired. Auditors frequently examine project files to ensure the public agency has obtained the required payment and performance bond. If an agency has returned the original bond to the surety, they may be at risk of an audit finding. Furthermore, there is no reason why the surety must have the original bond back. Under the language of the bond, the bond becomes unenforceable when all of the obligations of the contractor have been met (i.e., the project has been successfully completed through the warranty period and all subcontractors, suppliers, and workers have been paid).

Practical tips: The following steps can help ensure you are not releasing the bond early and giving up your rights under the bond:

Read the fine print: Read the language of the status inquiry form carefully before filling it out and signing it.

Cross out the fine print: When completing a status inquiry form from a surety, cross out and initial language that would release the bond prior to the expiration of the warranty period or that requires the original bond to be returned to the surety.

Train your staff: Make sure that agency staff who complete these forms are properly trained and aware of the issues.

Signature authority: Be deliberate about who in your agency is authorized to sign status inquiry forms. This person should read the language of the form before signing to ensure they are not giving up the agency's rights under the bond.

Consult with your attorney: If you have any questions about the impact of signing a status inquiry form, or the language on a form, be sure to consult with your agency's attorney for advice.

Wednesday, May 8, 2013

Documenting Government Credit Card Purchases

Government issued credit cards, sometimes known as "Purchasing Cards," "Procurement Cards," or "P-Cards" can be a great tool to simplify the procurement process. However, they come with risks if there are not adequate controls in place.

Audit finding: The Washington State Auditor's Office recently issued an audit finding to the Grays Harbor County Fire Protection District No. 16 for not having adequate supporting documentation, such as invoices or detailed receipts, to support $19,695 in expenses with District issued credit cards. The audit cited purchases for food, fuel, clothes, holiday decorations, supplies, and lodging that were not documented, raising the question whether they were an allowable use of public funds as required by state law.

Practical tips:

Policies: Does your agency have clear policies on the acceptable and unacceptable purchases? Do your policies prohibit an employee loaning their card to another employee? Do the policies establish the maximum dollar amount per purchase and per day, and prohibit splitting of purchases to be less than the established thresholds?

Training: Proper training should be mandatory for anyone issued an agency credit card, so they understand the expectations and restrictions surrounding use of the credit card.

Certification: Employees should be required to sign a statement acknowledging the policies surrounding use of the card and the consequences for using it improperly. Employees should understand they may be required to personally pay for unauthorized or inappropriate uses of the card.

Documentation: All purchases with an agency credit card should be documented with invoices or detailed receipts.

Monitoring: All purchases should be reviewed by a supervisor on a monthly basis before payment to ensure they are appropriate uses of the card and do not violate agency policies.

More information:

Click here to read the audit finding.

Click here to read other blog postings of mine relating to government issued credit cards.

Job Opening: Contract Specialist 3

Washington State Department of Enterprise Services (DES)

Position: Contracts Specialist 3

Location: Olympia, Washington

Closing Date: May 13, 2013 at 11:59 p.m. Pacific Time

Salary: $47,892 to $62,796 Annually

Job Summary: This position independently performs a variety of complex contract administration duties (design-bid-build, GC/CM, personal service contracting) as the Lead Contract Specialist for the DES Engineering and Architectural Services (E&AS)/Department of Corrections Team capital program. In conjunction with the project managers, this position prepares complex consultant agreements/amendments for design, construction contracts/change orders and interagency agreements for capital projects valued at $300 - $400 million biannually for client agencies statewide. The incumbent will also serve as the Project Tracking System Coordinator.

For More Information and to Apply: Click here.

Tuesday, May 7, 2013

New Public Procurement Laws Approved in 2013 Legislative Session

The Washington State Legislature has approved the following laws impacting public procurement and contracting:

Alternative public works procedures: Substitute House Bill 1466 reauthorizes the alternative public works contracting procedures of Design-Build, GC/CM, and Job Order Contracting for another eight years. There were a number of relatively minor changes to the law that I will blog about later.

No retainage on federally funded transportation projects: Substitute House Bill 1420 fixes a technical problem from previous legislation that was necessary to comply with U.S. Department of Transportation regulations regarding retainage. While much of the bill represents an improvement, it does have its flaws as I noted in a previous blog entry.

State agencies protected under payment bond: Under SHB 1420, no retainage may be withheld on any project funded in whole or in part with federal transportation funds. Instead, the protection normally afforded by retainage for subcontractors, suppliers, workers, and three state agencies (Revenue, Employment Security, and Labor and Industries) for taxes and premiums must come from the payment bond instead.

Notify state of acceptance: Even though no retainage may be withheld on these projects, the public agency must nevertheless notify the Departments of Revenue, Employment Security, and Labor and Industries of final acceptance for such contracts over $35,000.

Affidavits prior to final acceptance: For these federally funded transportation projects, the Affidavits of Wages Paid for the contractor and all subcontractors must be submitted prior to final acceptance by the public agency.

"Shall" to "must": There are numerous changes throughout the bill modifying "shall" to "must."

Evaluating the low bid for purchases before taxes: Under Engrossed Substitute Senate Bill 5110, a local government authorized to impose sales and business and occupation taxes may award a contract for supplies, materials, or equipment to a bidder submitting the lowest bid as calculated before the application of local sales and business and occupation taxes.

Water-Sewer Districts - Payment and Performance Bonds: Senate Bill 5186 will permit Water-Sewer Districts to require that payment and performance bonds on its public works contracts name the water-sewer district as the protected party (obligee) rather than the state. Prior to passage of this bill, all payment and performance bonds for a Water-Sewer District were technically required to name the state as the obligee. Up to this point, only cities and towns have had the ability to have themselves and not the state named as the obligee. While this bill fixes the problem for Water-Sewer Districts, there are a host of other types of public agencies that, by practice, require payment and performance bonds to name the agency as the obligee, notwithstanding the language of RCW 39.08.030.

School Districts - Bid thresholds: Engrossed Substituted House Bill 1633 increases thresholds for public bidding and performing public works with school district personnel. The dollar threshold above which bidding for a public work is required will be increased from $50,000 to $100,000. The dollar threshold below which a school district may use its own staff to perform a public work is increased from $40,000 to $75,000.

WSDOT - Use of Job Order Contracting: Under the provisions of House Bill 1768, the Washington State Department of Transportation (WSDOT) will be added to the list of public agencies authorized to use Job Order Contracting as described in Chapter 39.10 RCW. With the passage of the bill, WSDOT will be able to use Job Order Contracting for "the administration of building improvement, replacement, and renovation projects only."

Monday, May 6, 2013

Update on On-Call Public Works Contracting

The subject of on-call public works and maintenance contracts has been an area of considerable discussion over the last six months.

Auditor and L&I issues: It began in the fall of 2012 when the Washington State Auditor's Office issued a statement that they did not believe on-call public works contracts were specifically authorized in state law. In addition, the Department of Labor and Industries has required that an Affidavit of Wages Paid be filed for each task or work order issued under an on-call contract, regardless of the size of the task or work order.

Meeting last week: On Tuesday, April 20, 2013 a number of public agencies met in downtown Seattle, with many participating by telephone, to discuss the status of on-call public works and maintenance contracts. The Municipal Research and Services Center (MRSC) reported that the auditor's office informed them they were continuing to review the issue and to examine specific examples of problematic on-call contracts referred to them by the Department of Labor and Industries. The auditor's office told MRSC that they would not be available to discuss the issue in more detail until their review was completed, perhaps in June or July.

Public owners group: A group of public agencies has been meeting for a number of months to discuss the issue. They are comparing the similarities and differences in how they contract for on-call public works and maintenance, and may develop a "best practices" document to assist others. The public owners group will be the lead group in the future for concerns of public agencies on the issue of on-call public works and maintenance contracts, and for interacting with the State Auditor's Office and the Department of Labor and Industries.

Sunday, May 5, 2013

Training Last Week

Last Thursday, I was in Vancouver, Washington where I presented three training workshops at the annual conference of WASBO (Washington Association of School Business Officials). Here are the three topics I taught on:

What is the Davis-Bacon Act? Complying with Federal Prevailing Wage Requirements: Public works construction project with any federal funding require that the contractor and all subcontractors comply with federal prevailing wages, in addition to state prevailing wages and regulations. Public agencies must monitor and enforce compliance with these requirements.

What is the Davis-Bacon Act?
Check Your Federal Grant Requirements
When Do Federal Prevailing Wages Apply?
Federal vs. State Prevailing Wages
Effective Date for Prevailing Wages
Types of Prevailing Wage Rates
Fringe Benefits
Apprentices
Public Agency Responsibilities
Reviewing Payrolls
Typical Compliance Problems

Public Works Contract Close-out: Bonding, Retainage, and Claims: How should public agencies handle claims filed against the retainage and payment bond, and when should retainage be released to the contractor?

Retainage and Payment Bonds
Completion Dates
Filing, Renewing, and Releasing Claims
Pre-Claim Notices
Deadlines for Filing and Renewing Claims
Foreclosure of Claims and Payment
Priority of Claims Against Retainage
Release of Retainage

When Bad Things Happen to Bids: Strategies for Ensuring a Successful Public Works Project: The public works bidding process is fraught with potential for mistakes, protests, and appeals. What can public agencies do to help prevents such problems?

Why Aren't Bidders More Careful?
Why do Bidders Make Mistakes?
Missing Bid Prices
Conflict Between Words and Numbers
Bid Calculation Errors
Claims of Error
Is Your Bidder Playing Games?
Bid is Too Low
Unbalanced Bids
Conditioned or Qualified Bids
Will the Real Low Bidder Please Stand Up
Additive and Alternate Bids
Allowances
Tie Bids
Responsive Bids
Responsible Bidders
Local Bid Preferences
Bid Protests and Appeals

Contact me if you are interested in discussing bringing training to your agency. In addition to the training noted above, I can provide training on a wide array of other public procurement and contracting issues. Please contact me if you would like to discuss training.

Wednesday, May 1, 2013

Avoiding the Front Page of the Newspaper: Why Ethics Matters

Newspaper headlines are all too common that highlight ethical lapses by public agencies and public officials, ranging from contracting scandals, receipt of inappropriate gifts and bribes, private use of government resources, conflicts of interest, embezzlement, and sexual misbehavior.

Training: Last week, I was in Olympia, Washington where I trained the entire staff of the Port of Olympia on ethics issues to be aware of. Here's an outline of the 2.5 hour training session:

Why Should We Talk About Ethics?

What's So Important About Appearances?

8 Areas of Ethical Risk

5 Keys to Making Ethical Decisions

7 Strategies for Dealing with Ethical Issues

7 Risks of Ethical Lapses

Summary Steps to Take

Questions to ask:

Does your agency have an up-to-date ethics and conflict of interest policy?

Do employees know what is in the policy? Do you provide regular training and discussion on ethics?

Does your agency have structures and systems in place to help prevent ethical lapses?

What is the culture and tone regarding ethics that is set by the leadership of your agency?

More information: If you're interested in discussing how I might help you with your ethics policy and/or training, please contact me.

Job Opening: Contracts Specialist 2

Washington State Department of Enterprise Services (DES)

Position: Contracts Specialist 2

Location: Olympia, Washington

Closing Date: May 6, 2013 at 11:59 p.m. Pacific Time

Salary: $3,443 to $4,513 Monthly

Job Summary: This position is located in the Facilities Division, Engineering and Architectural Services (E&AS) and directly interfaces with project managers, client agencies, design consultants, contractors and the public to ensure that consistent contract activity is being conducted. This position writes professional contracts, and provides public works and energy program contract administration.

For More Information and to Apply: Click here.

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